Biota takes a remedial course

Drug developer
Biota
plans to spend more money on commercialising products to offset the sharp decline in royalties from sales of its flu drug, Relenza.

The Melbourne-based company said royalties from Relenza sales by marketing partner Glaxo­SmithKline were $1 million for the three months to March 31 on sales of $14.1 million.

Indicative Relenza royalty income for the nine months to March 31 was $4.3 million.

At Biota’s first-half results in February, chief executive
Peter Cook
said Biota would concentrate on the commercial development of the flu vaccine Laninamivir, phase II trials of its human rhinovirus cold virus, and a new lead candidate for the respiratory syncytial virus.

Mr Cook said this would help offset the plunge in royalties from sales of Relenza by GSK.

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The company reported a $15.9 million net loss for the first half, compared with a $33.4 million net profit a year earlier.

Biota shares plunged last year because of investor concerns about lower royalties from Relenza as global fears about the swine flu pandemic faded.

The company had $77.5 million of cash at December 31, down from $104.9 million six months earlier.

Biota expects full-year earnings will benefit from locking in an alternative revenue stream ahead of the northern hemisphere flu season after its licensing partner, Daiichi Sankyo, received approval to ­manufacture and market its long-acting flu anti­viral drug, Inavir, in Japan.

Biota said it had received its maiden royalty revenue from Inavir of $1.2 million in the first half.

Mr Cook said the peak of the Japanese flu season was in February so the March quarter would be critical for first-season sales of Inavir.

Biota will release March­quarter royalties for Inavir in a couple of weeks.

These will reveal if there has been any impact from the recent earthquakes in Japan.

RBS Morgans healthcare analyst Scott Power said the quarterly Relenza result was below forecasts, but he was positive Biota’s upcoming products would deliver more royalty-generating drugs over the long term.

“They recently secured an up to $US231 million [$213 million] grant from the Office of Biomedical Advanced Research and Development Authority, which is game-changing for the company," Mr Power said.

He said the grant had removed the need for Biota to license out the long-acting version of Relenza, Laninamivir, over the next six months.

Biota has said it expects to have Laninamivir ready for this year’s flu season in Japan.

Biota shares fell more than 4 per cent in early trade but closed 2¢ lower at $1.20.

The stock is down about 15 per cent for the month and is ­about 40 per cent off a 12-month high­of $1.92 reached on April 28 last year.